Cavium Inc Agrees to Acquire QLogic Corp

San Jose, California based Cavium Inc. has agreed to buy QLogic Corp, the maker of switches, adapters and  networking products.

The acquisition deal has an enterprise value of approximately $1 billion and will boost the semiconductor product's company's data-center and storage business. It is estimated to increase the adjusted earnings per share of 2017 by a range of 60 to 70 cents.

The deal, which is a cash and stock combination, has an equity value of approximately $1.36 billion which also includes close to $355 million in the balance sheet of QLogic based on the stock price of Cavium in recent times. The deal is valued at almost $15.50 per share which is fourteen percent premium to the closing price of QLogic on Wednesday.

According to Cavium,  the deal will allow the company "substantial customer and revenue diversification."

Products of Cavium, include ThunderX processors and XPliant switches which are popular names in networking, and wireless applications. Last year the company's revenue was $412.7 million. On the other hand, QLogic earned revenue of $458.9 million in fiscal year that concluded on April 3.